Tuesday, 21 June 2016

Contract shambles laid bare in secret report

A secret report which sounded the death knell of the Scottish Borders waste management project - the council has been forced to issue the document under Freedom of Information - shows the authority feared termination of the contract with New Earth Solutions would provide an opportunity for 'negative' press coverage.

While the £80 million deal between Scottish Borders Council, their contractors and funders was dying on its feet in February 2015, the project team was attempting to draw up a joint statement with NES "to proactively go to the media" after more than £2 million had been squandered on the venture.

The 18-page report written for councillors by SBC's Corporate Transformation & Services Director Rob Dickson confirms that the money to pay for a £21 million treatment facility at Easter Langlee was still not in place four years after the original contract with NES was signed.

And the form of technology chosen to treat and convert 40,000 tonnes of Borders refuse annually still did not work even though elected members and officers were convinced the NES system was a market leader and provided an opportunity for SBC to become the 'top dog' waste treatment authority in Scotland. Instead the entire scheme proved to be a complete shambles, leaving the Borders years behind other local authorities in terms of refuse disposal.

Council members had agreed in May 2014 to grant NES and the company's offshore funder New Earth Recycling & Renewables [Infrastructure] PLC (NERR) a six-month contract moratorium to try to sort out the extremely serious financial and technological issues facing the project.

But the confidential report just released shows the standstill period proved to be a complete waste of time. The document says: "The financial proposals are significantly weaker than agreed at contract signature, without a funder of last resort. The energy from waste technology has not progressed as programmed. The delivery of a successful energy from waste solution is uncertain".

It begs the question why did the councillors sanction this 'pig in a poke' scheme without funding or proven technology secured in the first place?

Mr.Dickson's report concludes: "The wider project analysis demonstrates that taking account of the conclusion of the moratorium review; the failure of New Earth Solutions to deliver the project on two occasions to date and the timescales required for the Council to deliver a solution to meet the January 2021 legislative requirements, the Council has no option but to use the right to terminate the contract and take back control of delivering a solution that meets the needs and requirements of the Council and the Scottish Borders".

It is explained that the report is private because SBC had signed up to a confidentiality clause within the waste treatment project agreement. According to the report: "The Council has a duty to protect the reputation of New Earth Solutions, as a perceived failure of the project could affect the future funding opportunities of the company and as such the funding of the Easter Langlee project."

A little more than a year after that report was rubber-stamped by Borders councillors , NES plunged into administration owing many millions of pounds to two banks. A few days later provisional liquidators were appointed to the NERR fund with moves to wind it up in the Isle of Man courts.

The scale of this fiasco in which SBC was a leading player cannot be over-emphasised.

An array of highly paid consultants, "specialists" and lawyers walked away from the doomed venture with more than £2 million of public money; shareholders in NES lost at least £1.3 million as the company struggled to secure and progress the contract; NERR's promoters and managers were "earning" more than £6 million in fees while the fund was suspended and the Borders contract moratorium was in place; and the Borders was denied the chance to have a functioning and efficient

waste treatment facility to divert 80% of rubbish from landfill, saving taxpayers many millions of pounds in landfill tax in the process.

Perhaps, one day, all of this will warrant some kind of meaningful investigation. The council's determination to keep the entire tragi-comedy from public scrutiny is also a matter for extreme concern and regret.